Los Angeles-based asset management firms overseeing more than $4 trillion in assets are battling the impact of the destructive wildfires on their operations with some relocating office spaces or shifting to work from home and others supporting staff members who have lost their properties.
The Los Angeles area is home to large industry players like Capital Group, TCW Group and hedge funds such as Oaktree Capital and Ares Management.
In total, firms in Los Angeles manage more than $4 trillion of the $132 trillion in global assets managed in the U.S., including several major players in the bond market.
The disruption comes when U.S. Treasury yields have been climbing on reinforced expectations that interest rates will stay high for longer and on fiscal concerns. The blazes have reduced entire neighborhoods to smoldering ruins, leaving an apocalyptic landscape and devastating both suburbs and wealthy enclaves.
"A number of our team members have been displaced and several have lost their homes completely, my family included," said Katie Koch, president and CEO of TCW, a firm that manages $203 billion in assets, in a letter to her Los Angeles colleagues that she reposted on LinkedIn.
TCW said all of its Los Angeles-based employees are safe and accounted for. Koch did not respond immediately to a request for comment, but a company spokesperson confirmed that her home had been lost to the fire.
Anacapa Advisors, a $60.5 million hedge fund that moved into new, larger offices in Pacific Palisades only weeks before the fires, saw that building burn to the ground as the Palisades Fire, the largest of several fires sweeping across Los Angeles County, whipped through the community, according to a spokesperson for the firm.
In a letter to the firm's clients, Phil Pecsok, Anacapa's founder and CIO, said all its employees are safe and that the team successfully activated its business continuity plan.
They now work remotely "with full access to trading platforms and risk monitoring systems." They are placing orders for additional trading screens and communicating with each other continuously via Zoom, he said.
Pecsok did not respond immediately to a request for further comment. The spokesperson said Pecsok was working from a second home after evacuating from his primary residence. Other asset management firms are taking precautionary steps as forecasts predict the region's flame-fanning Santa Ana winds will persist through to Wednesday, raising the risk that fires may spread further.
Oaktree Capital, an asset management firm managing more than $200 billion in assets located in downtown Los Angeles, remains open for regular business operations, said Todd Molz, the firm's chief operating officer. Many of Oaktree's 700 employees in the area have been affected by the fires, he said.
"Our data center in Los Angeles is equipped with backup power and is available without interruption in the event of regional or localized power outages caused by the wildfires," Molz said.
DoubleLine's employees based in Los Angeles were working remotely this week due to the poor air quality throughout downtown, a spokesperson for the Florida-headquartered bond investment firm said.
The Milken Institute, a think tank based in Santa Monica, and Dimensional Fund Advisors, an investment firm headquartered in Texas with nearly $800 billion in assets and an office in Santa Monica, said they had switched mainly to work-from-home arrangements.
The Milken Institute said it had closed its office, encouraging staffers to care for their families and work from home, while DFA said it was urging anyone who could do so to work remotely.
Kevin Philip, partner at Los Angeles-based Bel Air Investment Advisors, which manages more than $10 billion in assets, said he and some of his colleagues were working remotely. "COVID-19 really set us up for managing through this and keeping our functionality going," Philip said.
Other large asset managers are further from the immediate danger zone, such as Pimco, which is based some 40 miles (64 kilometers) south of Los Angeles in Newport Beach. The company declined to comment.
